Dispatch Sues San Diego Airport Over Unapproved Trip Tax

SAN DIEGO (CN) – Tax or fee? If you ask the group that filed a class action complaint in San Diego Superior Court Tuesday, they’d say the San Diego County Regional Airport Authority is collecting an illegal tax disguised as a fee from passengers who hitch a ride to and from the airport.

KSAN LLC, which does business as Airport Dispatch and sets the rates for taxi fares for affiliated taxicabs, sued the airport authority over trip fees tacked onto fares paid by passengers of taxicabs, airport shuttles, limousines, rental cars, and transportation network companies such as Uber and Lyft.

The fee has undergone multiple iterations over nearly a decade with transportation providers also being subject to paying the fee off and on over the years.

The airport authority claims it implemented the fee to comply with a 2008 Attorney General memorandum of understanding to reduce greenhouse gas emissions for airport shuttles by 2015.

But the class says the airport authority, as approved by its 12-member board, took the fees beyond the agreement with the attorney general and came up with its own incentives and disincentives, or, as airport authority Vice President of Operations Angela Shafer-Payne puts it, “carrots and sticks,” to try to convert all transportation vehicles to use 100 percent alternative fuel by 2015, according to the complaint.

Airport Dispatch is asking the court to declare the trip fees as special taxes imposed on the traveling public without a vote and to enjoin the airport authority from collecting any more of the alleged taxes.

Joe Henchman, executive vice president of the nonprofit Tax Foundation based in Washington D.C. and author of a book on how taxes are distinguished from fees, said in a phone interview he believes Airport Dispatch has a “good case,” calling an admission by an airport authority board member that they collected more in fees than they needed to cover transportation costs at the airport “dangerous.”

“We, as Americans, have a visceral reaction to taxes – our country was founded on rejecting taxes,” Henchman said.

“Politicians have every reason to say this is a fee and not a tax, but it’s cases like this that are important for policing the line between taxes and fees,” he added.

The debate over tax versus fee has played out across California since voters passed Proposition 13 in 1978, which amended the California Constitution to require voter approval to raise taxes.

According to the 46-page complaint, when the airport authority tried to implement its first trip fee in 2010 – a 50 cent fee to be paid by taxicab passengers – it was forced to abandon the fee because it had not been approved by the board of the local transit authority, Metropolitan Transit System. The city attorney later issued a legal opinion indicating the trip fee “might be a tax.”

It took two more years before the first trip fee on travelers was approved and implemented in May 2012.

Currently, the base fee for taxicabs is $3.86, or $6.76 per trip for non-alternative fuel vehicles. Alternative-fuel taxicabs pay a $2.90 fee, a 19 cent increase over the previous fiscal year, which the class points out is the same rebate amount airport authority staff approved to go toward private taxi companies.

When approving the fiscal year 2017 budget for Transportation Network Companies, the board agreed they should pay significantly less – $2.22 as a base fee per Lyft or Uber trip; $1.67 for passengers of alternative fuel vehicles; or, $3.89 per non-alternative fuel trip.

It added that the San Diego County Regional Airport Authority “via a few private-minded managers on SDCRAA staff, has assumed effective control of both the MTS taximeter and TNC smartphone applications, for impositions of special taxes in San Diego at will.”

That $4.06 tax received backlash from ride service passengers who questioned their bill on their mobile applications, which simply listed the fee as a “tax,” the San Diego Union-Tribune reported.

The fee is supposed to incentivize drivers to purchase eco-friendly vehicles. But the class says the tax goes beyond any costs the airport has had to pay to accommodate drivers.

“The rebate or non-remittal amounts, show that the charge imposed upon passengers were not reasonable cost recovery, and instead were for illegal gifts of public funds, based on vehicle emissions regulation for which [San Diego Regional Airport Authority] had no authority, and which the [Attorney General memorandum of understanding] did not mention, because the AGMOU referenced shuttles only,” the class claims.

Since Proposition 13 was passed, voters have approved multiple propositions ensuring they maintain authority when it comes to local taxes, including Proposition 26, which California voters passed in 2010 to require a supermajority vote to approve new taxes and fees.

San Diego tax attorney Edward Teyssier said in a phone interview the difference between taxes and fees is that fees are supposed to charge only enough to cover the costs of a good or service provided. When the money collected exceeds costs, and “when everybody has to pay for the government service, then it’s a tax,” Teyssier said.

“It is a tax because if you want to use the airport you have to pay an additional charge, but you’re not getting any extra services. They’re charging for a government service which is already dialed into taxes and fees paid through airline tickets,” Teyssier said.

Teyssier, who has brought similar lawsuits against government agencies for charging alleged taxes that were classified as fees, called the trip fee “just another intrusion into our pocketbooks” and said the airport authority should be refunding travelers for the fees they paid.

The class is represented by Kamran Hamidi, who told Courthouse News he did not want to make extra-judicial comments on the record.

San Diego Regional Airport Authority spokeswoman Rebecca Bloomfield said the airport authority does not comment on pending litigation.